qualifying years for state pension.

SnowMan

buffman wrote: »

Thanks, Snowman. How many years in arrears can one pay Class 3 NIC? From what you say, it probably makes sence to make contributions until 2017 and then review.

Usually 6 years see

http://www.pensionsadvisoryservice.org.uk/state-pensions/voluntary-national-insurance-contributions

There are going to be people trying to finesse the payment of class 3, by working out whether it is more beneficial to pay them before or after 2017 (for example by getting to 30 years by 2017 and possibly paying for another 5 years post 2017).

Too complicated to give general guidance here,

downshifter98

class 3 contributions actually jumped up in price when the requirement was reduced to 30 years so the increase to 35 years should off-set any increase based on the £144 pension, however being a cynical type they will probably forget about that! I have 29 years and hope not to return to work so will be 'buying' a few more years between now and 2016. Annoying that the requirement has gone back up (personally) but makes sense overall and a £15,000 net annual pension (for a couple) seems like a good solid base to me ie it will cover all of the basic living costs and leave us to decide how much extra we would like for comfortable living.

kidmugsy

p00hsticks wrote: »

My apologies

You shouldn't have apologised; she was indeed moaning about changes which won't affect her.

kidmugsy

p00hsticks wrote: »

It may be that Joe Crystal has mis-read the BBC website reporting of this linked to earlier on this thread, as I did originally (I think it could have been worded better).

I'm not sure the BBC's political bias would have allowed them to word it better.

SnowMan

downshifter98 wrote: »

class 3 contributions actually jumped up in price when the requirement was reduced to 30 years so the increase to 35 years should off-set any increase based on the £144 pension, however being a cynical type they will probably forget about that! I have 29 years and hope not to return to work so will be 'buying' a few more years between now and 2016. Annoying that the requirement has gone back up (personally) but makes sense overall and a £15,000 net annual pension (for a couple) seems like a good solid base to me ie it will cover all of the basic living costs and leave us to decide how much extra we would like for comfortable living.

Currently the Foundation Amount guarantee is that you will get at least

a) 119 (=29/35 x 144) less the contracted out deduction for periods where you were contracted out
b) 103 (=29/30 x 107) the current full state pension plus any SERPS/S2P you have accrued in qualifying contracted-in periods.

The bit in b) is effectively saying 'you will get at least what you would have got under the old state scheme' and a) is saying 'but we might pay you a bit more if the new scheme would have been better had it been in place since the outset but we'll better adjust for contracting-out while we do that'

At some point it might be worth paying for an extra year pre 2017 (assuming you don't qualify through work).

However that brings you up to 30 years and so your guarantee then amounts to

a) 123 (=29/35 x 144) less the contracted out deduction for periods where you were contracted out
b) 107 the current full state pension plus any SERPS/S2P you have accrued in qualifying contracted-in periods.

If a) is less than b) at this point then any further class 3 contribution paid before 2017 is likely to be wasted money as it will increase a) but not part b), and the maximum of a) and b) might still be b). So paying a couple of years pre 2017 may be a mistake, paying a single year may be OK.

However there may then be a possibility of paying class 3 post 2017!

downshifter98

SnowMan wrote: »

Currently the Foundation Amount guarantee is that you will get at least

a) 119 (=29/35 x 144) less the contracted out deduction for periods where you were contracted out
b) 103 (=29/30 x 107) the current full state pension plus any SERPS/S2P you have accrued in qualifying contracted-in periods.

The bit in b) is effectively saying 'you will get at least what you would have got under the old state scheme' and a) is saying 'but we might pay you a bit more if the new scheme would have been better had it been in place since the outset but we'll better adjust for contracting-out while we do that'

At some point it might be worth paying for an extra year pre 2017 (assuming you don't qualify through work).

However that brings you up to 30 years and so your guarantee then amounts to

a) 123 (=29/35 x 144) less the contracted out deduction for periods where you were contracted out
b) 107 the current full state pension plus any SERPS/S2P you have accrued in qualifying contracted-in periods.

If a) is less than b) at this point then any further class 3 contribution paid before 2017 is likely to be wasted money as it will increase a) but not part b), and the maximum of a) and b) might still be b). So paying a couple of years pre 2017 may be a mistake, paying a single year may be OK.

However there may then be a possibility of paying class 3 post 2017!

Thanks for detailed reply - I think I sort of get it - I was in a final salary scheme but didn't pay the lower NI rate so built up about £20 of s2p - only bit i'm not sure about is the 'contracted out deduction'? For now I intend to buy 1 year so upto 30 years and then perhaps wait for the dust to settle...

SnowMan

downshifter98 wrote: »

Thanks for detailed reply - I think I sort of get it - I was in a final salary scheme but didn't pay the lower NI rate so built up about £20 of s2p - only bit i'm not sure about is the 'contracted out deduction'? For now I intend to buy 1 year so upto 30 years and then perhaps wait for the dust to settle...

Sorry it is a bit complicated and that was my best attempt to simplify it.

You probably should get an up to date pensions statement which may indicate your rough state second pension statement and then you can start to estimate the blanks and work out what is best.

However well we analyse the white paper there is going to be a bit of guesswork and uncertainty here. And there is plenty of dust that will be hovering around for a while.

If there is absolutely no way you are getting the extra year to bring you up to 30 by say working or though a credit for caring etc, and you had already worked out paying an extra year was a good idea under the old system then it is hard to see any real additional reason not to pay a year to get you up to 30 years coming out of yesterday's announcement. It is possible I've missed something though.

parcival

For most of us this is a bit confusing..

BUT

MANY THANKS FOR ALL ON HERE WHO HAVE TAKEN THE TROUBLE TO READ THE DOC AND WHO UNDERSTAND IT BETTER THAN MOST AND WHO HAVE TAKEN THE TIME TO HELP ENLIGHTEN THE REST OF US....

bilbo51

WISHIWASRICH wrote: »

If you have 30 years you will get 86% of the flat rate pension - 30/35

I've got 42 years - how much will I get?

grey_gym_sock

bilbo51 wrote: »

I've got 42 years - how much will I get?

riches beyond your wildest dreams